UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of
- ---------- the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1999
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or
Transition Report Pursuant to Section 13 or 15(d) of
- ---------- the Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 0-10222
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QUALIFIED PROPERTIES 80, L.P.
-----------------------------
Exact Name of Registrant as Specified in its Charter
Virginia 13-3046808
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State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
- ------------------------------------- -----
Address of Principal Executive Offices Zip Code
(212) 526-3183
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Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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<PAGE>
2
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
At September 30, At December 31,
1999 1998
(unaudited) (audited)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets held for disposition $ -- $5,605,771
Cash and cash equivalents 7,502,583 1,938,059
Restricted cash -- 77,510
Prepaid expenses -- 10,225
Rent and other receivables 2,159 3,523
- ---------------------------------------------------------------------------------
Total Assets $7,504,742 $7,635,088
=================================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 93,282 $ 269,259
Due to affiliates 31,810 11,946
Mortgage note payable -- 3,832,621
----------------------------
Total Liabilities 125,092 4,113,826
----------------------------
Minority interest 1,282,413 1,120,945
----------------------------
Partners' Capital (Deficit):
General Partners (188,460) (225,429)
Limited Partners (51,234 units outstanding) 6,285,697 2,625,746
----------------------------
Total Partners' Capital 6,097,237 2,400,317
- ---------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $7,504,742 $7,635,088
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the nine months ended September 30, 1999
General Limited
Partners Partners Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1998 $(225,429) $2,625,746 $2,400,317
Net income 36,969 3,659,951 3,696,920
- ---------------------------------------------------------------------------------
Balance at September 30, 1999 $(188,460) $6,285,697 $6,097,237
=================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rental $ 89,235 $422,293 $ 958,364 $1,427,943
Other 5,486 8,884 10,695 43,611
Interest 93,646 26,320 136,551 210,633
------------------------------------------------------
Total Income 188,367 457,497 1,105,610 1,682,187
- ----------------------------------------------------------------------------------------------------
Expenses
Property operating 6,689 237,533 465,760 741,427
Depreciation and amortization -- -- -- 285,572
Interest -- 101,711 279,910 307,035
General and administrative 65,260 104,528 279,630 245,171
------------------------------------------------------
Total Expenses 71,949 443,772 1,025,300 1,579,205
- ----------------------------------------------------------------------------------------------------
Income before minority interest
and gain on sale of real estate 116,418 13,725 80,310 102,982
Minority interest (8,108) (4,143) (161,468) (4,086)
------------------------------------------------------
Income before gain on sale of real estate 108,310 9,582 (81,158) 98,896
Gain on sale of real estate 50,000 -- 3,778,078 7,829,940
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Net Income $158,310 $ 9,582 $3,696,920 $7,928,836
====================================================================================================
Net Income Allocated:
To the General Partners $ 1,583 $ 96 $ 36,969 $ 79,288
To the Limited Partners 156,727 9,486 3,659,951 7,849,548
- ----------------------------------------------------------------------------------------------------
$158,310 $ 9,582 $3,696,920 $7,928,836
====================================================================================================
Per limited partnership unit
(51,234 outstanding) $ 3.06 $ .19 $ 71.44 $ 153.21
- ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months ended September 30,
1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 3,696,920 $ 7,928,836
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization -- 285,572
Gain on sale of real estate (3,778,078) (7,829,940)
Minority interest in income of consolidated venture 61,468 4,086
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Cash restricted 77,510 (43,678)
Prepaid expenses 10,225 (20,611)
Rent and other receivables 1,364 (4,236)
Deferred rent receivable -- 7,546
Accounts payable and accrued expenses (175,977) (44,280)
Due to affiliates 19,864 1,524
Security deposit payable -- (60,521)
---------------------------
Net cash provided by operating activities 13,296 224,298
- ------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of real estate 9,409,802 15,223,030
Additions to real estate assets (25,953) (41,308)
---------------------------
Net cash provided by investing activities 9,383,849 15,181,722
- ------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Distributions paid to partners -- (14,310,742)
Principal payments on mortgage note payable (3,832,621) (72,531)
---------------------------
Net cash used for financing activities (3,832,621) (14,383,273)
- ------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 5,564,524 1,022,747
Cash and cash equivalents, beginning of period 1,938,059 1,023,370
- ------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 7,502,583 $ 2,046,117
====================================================================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 279,910 $ 307,035
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Supplemental Disclosure of Non-Cash Operating Activities:
In connection with the General Partners' intent to sell the properties, real estate
held for investment, deferred rent receivable and prepaid leasing commissions in the
amounts of $5,135,464, $106,118, and $181,391, respectively, were reclassified to
"Real estate assets held for disposition" in June of 1998.
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</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements should be read in conjunction
with Qualified Properties 80, L.P.'s (the "Partnership") annual 1998 audited
consolidated financial statements within Form 10-K.
The unaudited consolidated financial statements include all normal and recurring
adjustments which are, in the opinion of management, necessary to present a fair
statement of financial position as of September 30, 1999 and the results of
operations for the nine months ended September 30, 1999 and 1998, cash flows for
the nine months ended September 30, 1999 and 1998, and the statement of
partners' capital (deficit) for the nine months ended September 30, 1999.
Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.
The following significant events occurred subsequent to fiscal year 1998, which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On June 30, 1999, the Partnership closed on the sale of 889 Ridgelake Office
Building and 959 Ridgeway Office Building (the "Properties") to a Joint Venture
Partner, Boyle Investment Company and related parties (the "Buyers"), for
selling prices of approximately $7,440,000 and $1,969,000, respectively, net of
closing adjustments and selling costs, which resulted in gains of approximately
$3,066,000 on the sale of 889 Ridgelake and $712,000 on the sale of 959
Ridgeway. The selection of the Joint Venture Partner was the result of a
competitive bidding process organized by the real estate broker engaged to
assist in selling the Partnership's two remaining Properties.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the fourth
quarter of 1999 and dissolve the Partnership by year-end 1999.
<PAGE>
6
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
On June 30, 1999, the Partnership closed on the sale of the 889 Ridgelake Office
Building and 959 Ridgeway Office Building (the "Properties") to a Joint Venture
Partner, Boyle Investment Company and related parties (the "Buyers"), for
selling prices of $7,440,302 and $1,969,500, respectively, net of closing
adjustments and selling costs, which resulted in gains of $3,066,328 on the sale
of 889 Ridgelake and $711,750 on the sale of 959 Ridgeway. The selection of the
Joint Venture Partner was the result of a competitive bidding process organized
by the real estate broker engaged to assist in selling the two remaining
Properties.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the fourth
quarter of 1999 and dissolve the Partnership by year-end 1999.
The Partnership had cash and cash equivalents totaling $7,502,583 at September
30, 1999, compared to $1,938,059 at December 31, 1998. The increase is primarily
due to the sale of the two remaining Properties on June 30, 1999.
Rent and other receivables totaled $2,159 at September 30, 1999, compared to
$3,523 at December 31, 1998.
Accounts payable and accrued expenses totaled $93,282 at September 30, 1999,
compared with $269,259 at December 31, 1998. The decrease is largely due to the
lower real estate tax and professional fee accruals due to the sale of the
Properties.
On June 30, 1999, the mortgage note payable on 889 Ridgelake was paid from the
proceeds of the sale of the Property.
In February 1998, the sale of Stevens Creek Office Building ("Stevens Creek")
was completed. The property was sold for net proceeds of $15,223,030 and
resulted in a gain on sale of $7,829,940, which is reflected in the
Partnership's statement of operations for the nine months ended September 30,
1998. In April 1998, the Partnership paid a special cash distribution to the
Limited Partners from the net proceeds from the sale of Stevens Creek in the
amount of $261.45 per Unit to Unitholders of record as of April 1, 1998.
Results of Operations
- ---------------------
For the three and nine months ended September 30, 1999, the Partnership's
operations resulted in net income of $158,310 and $3,696,920 compared to net
income of $9,582 and $7,928,836 for the corresponding periods in 1998. Net
income for the 1999 and 1998 nine-month periods includes gains on the sale of
real estate in the amounts of $3,778,078 and $7,829,940. Excluding these gains,
Partnership operations resulted in income before minority interest and gain on
sale of real estate of $116,418 and $80,310 for the three and nine months ended
September 30, 1999 compared with $13,725 and $102,982 for the three and nine
months ended September 30, 1998. The decrease in net income before minority
interest and gain on sale for the nine months ended September 30, 1999 is
primarily due to higher interest income and rental income in 1998 offset by
lower depreciation and amortization, and property expenses in 1999.
<PAGE>
7
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
Interest income totaled $93,646 and $136,551 for the three and nine months ended
September 30, 1999 compared to $26,320 and $210,633 for the corresponding
periods in 1998. The increase in the three-month period is attributable to the
higher cash balance due to the net proceeds from the sale of 889 Ridgelake and
959 Ridgeway. The decrease for the nine-month period is due to the higher cash
balance in 1998 from the sale of Stevens Creek.
The decrease in property operating expenses is due to the sale of the two
remaining Properties on June 30, 1999.
General and administrative expenses totaled $65,260 and $279,630 for the three
and nine months ended September 30, 1999, respectively, compared with $104,528
and $245,171 for the corresponding periods in 1998. The decrease for the three
months is due to lower administrative expenses. The increase for the nine months
is due to the marketing expenses associated with the sale of the two remaining
Properties.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
On July 13, 1999 the Partnership filed a form 8-K reporting that
on June 30, 1999 the Partnership executed a sale of 889
Ridgelake and 959 Ridgeway Office Buildings.
<PAGE>
8
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
QUALIFIED PROPERTIES 80, L.P.
BY: QP80 REAL ESTATE SERVICES, INC.
General Partner
Date: November 12, 1999 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 7,502,583
<SECURITIES> 000
<RECEIVABLES> 2,159
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 7,504,742
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 7,504,742
<CURRENT-LIABILITIES> 125,092
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 6,097,237
<TOTAL-LIABILITY-AND-EQUITY> 7,504,742
<SALES> 958,364
<TOTAL-REVENUES> 1,105,610
<CGS> 000
<TOTAL-COSTS> 465,760
<OTHER-EXPENSES> 279,630
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 279,910
<INCOME-PRETAX> (81,158)
<INCOME-TAX> 000
<INCOME-CONTINUING> (81,158)
<DISCONTINUED> 000
<EXTRAORDINARY> 3,778,078
<CHANGES> 000
<NET-INCOME> 3,696,920
<EPS-BASIC> 71.44
<EPS-DILUTED> 71.44
</TABLE>
